The United States Securities and Exchange Commission (SEC) announced Friday that it has settled charges against popular cryptocurrency mining chip maker NVIDIA Corporation.
NVIDIA Agrees to Pay $5.5 Million in Settlement
The crypto mining hardware manufacturer agreed to pay $5.5 million in civil charges for violation of Section 17(a)(2) and (3) of the Securities Act of 1933 and the disclosure provisions of the Securities Exchange Act of 1934.
The company was accused of inadequate disclosure of the amount of its graphic cards sold to cryptocurrency miners and the impact on the company’s revenue.
The graphic cards were originally designed and marketed for gaming before they were discovered to be useful in crypto mining.
According to the SEC’s official statement, NVIDIA failed to disclose that crypto mining was a “significant element” of its revenue growth during back-to-back quarters in 2018.
A Cease-and-Desist Order
The Commission noted that the company was charged with misleading investors and analysts interested in understanding the influence crypto mining has on the company.
NVIDIA’s non-disclosure of its revenue sources was considered misleading given the impression that its gaming business was not significantly driven by crypto mining.
The financial watchdog also highlighted two NVIDIA disclosures back in 2018 which reported material revenue growth without the inclusion of crypto mining despite knowing the effects of its growth. The SEC’s order also finds that NVIDIA failed to maintain adequate disclosure controls and procedures.
“NVIDIA’s disclosure failures deprived investors of critical information to evaluate the company’s business in a key market. All issuers, including those that pursue opportunities involving emerging technology, must ensure that their disclosures are timely, complete, and accurate,” said Kristina Littman, chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit.
Meanwhile, NVIDIA did not refute or deny the findings before agreeing to settle the charges with a cease-and-desist order from the SEC.
More SEC settlements
Earlier in February, crypto lending platform BlockFi agreed to pay $100 million in penalty for offering illegal lending products on its platform and for the violation of registration provisions of the Investment Company Act of 1940.
The crypto lending platform also agreed to stop the sale of its unregistered products along with the fine.
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